6th Circuit Joins Employee Class Action Bandwagon
Previously we wrote about the pendulum swing regarding employee class action waivers; first to one extreme, with the Supreme Court’s 2011 AT&T Mobility LLC v. Concepcion decision, which looked like the death knell for employee class actions; and recently to the other extreme, with the National Labor Relations Board, backed by several of the Circuits, breathing new life into employee class actions.
In short, the 7th, 9th and now the 6th Circuits have found that the National Labor Relations Act (NRLA) guarantees employees’ statutory right “‘to engage in … concerted activities for the purpose of … mutual aid or protection’ to include a right to ‘join together to pursue workplace grievances, including through litigation.’” (Morris v. Ernst &Young, LLP, (9th Cir. 2016) 834 F.3d 975, 980, citing D.R. Horton, 357 NLRB No. 184 (2012)). These Circuits found that the NLRA trumps the Federal Arbitration Act (FAA), and an employer cannot require its employees to waive their class action rights (i.e., to agree to individually litigate their claims against the employers).
On the other side, the 2nd, 5th and 8th Circuits have found that the FAA trumps the NRLA, and employers can require their employees to waive their class action rights.
The ability to bring class actions for certain types of employment claims, such as claims for unpaid wages, continues to be an important issue. Employee counsel assert that a class is necessary to make it worthwhile to pursue the relatively small individual damages claims. Employers note that the employees have the right to recover attorneys’ fees, so their rights are protected, and that the arbitration setting, which is designed for efficient resolution of claims, is ill-suited to class-wide litigation.
On May 26, 2017, in National Labor Relations Board v. Alternative Entertainment, Inc. (6th Cir. 2017), a split 6th Circuit joined the 7th and 9th Circuits, finding that an employment agreement requiring its employees to arbitrate any dispute and waive any right to join any class action was unenforceable. In that case, a field technician brought an action before the NLRB relating to his compensation. The NLRB found the employer had violated the NLRA by mandating binding arbitration and precluding class actions. The 6th Circuit criticized the 5th Circuit’s contrary finding and found that the NLRA’s right to engage in concerted activity rendered the employer’s class action waiver unenforceable.
In January the Supreme Court granted certiorari, consolidating three of these cases:
- National Labor Relations Board v. Murphy Oil USA, Inc. (5th Cir. 2015) (finding employee class action waivers enforceable)
- Epic Systems Corp. v. Lewis (7th Cir. 2016) (finding employee class action waivers unenforceable)
- Ernst & Young, LLC v. Morris (9th Cir. 2016) (finding employee class action waivers unenforceable)
The late Justice Scalia authored the AT&T Mobility, LLC. v. Concepcion 5-4 decision, and Supreme Court watchers are eager to see whether the recently appointed Justice Gorsuch, whom many believe share Justice Scalia’s legal philosophy, will join the conservative wing and affirm employers’ ability to preclude their employees from joining class actions.